Question 1

Which of the following would an accountant not need to know when conducting a compilation?

Accepted Answer

A)  The accounting principles and practices of the industry in which the entity operates. 
B)  A general understanding of the nature of the entity's business transactions and the form of its accounting records. 
C)  The accounting basis on which the financial statements are to be presented. 
D)  The accountant would need to know all of the other items listed when conducting a compilation.

Question 2

In providing PrimePlus services, a CPA is likely to perform all of the following functions except:

Accepted Answer

A)  Observe and report on the quality of care provided to older individuals. 
B)  Directly receive income and pay bills and provide an accounting for these transactions. 
C)  Directly evaluate the quality of health care services provided by physicians and other medical caregivers. 
D)  Perform assurance-related procedures by inspecting logs or other evidence to support that contracted services have been provided.

Question 3

An attest service occurs when a practitioner is engaged to issue a report on subject matter that is the responsibility of another party.

Accepted Answer

A) True 
 B)False

Question 4

When an accountant compiles a nonpublic entity's financial statements that omit substantially all disclosures required by generally accepted accounting principles, the accountant should indicate in the compilation report that the financial statements are

Accepted Answer

A)  Restricted for internal use only by the entity's management. 
B)  Not to be given to financial institutions for the purpose of obtaining credit. 
C)  Compiled in conformity with a comprehensive basis of accounting other than generally accepted accounting principles. 
D)  Not designed for those who are uninformed about the omitted disclosures.

Question 5

Management and the external auditor are responsible for the effectiveness of the entity's internal control.

Accepted Answer

A) True 
 B)False

Question 6

Accepting an engagement to compile a financial projection for a public company most likely would be inappropriate if the projection were to be distributed to

Accepted Answer

A)  A bank with which the entity is negotiating for a loan. 
B)  A labor union with which the entity is negotiating a contract. 
C)  The principal stockholder, to the exclusion of the other stockholders. 
D)  All stockholders of record as of the report date.

Question 7

Jones Retailing, a nonpublic entity, has asked Winters, CPA, to compile financial statements that omit substantially all disclosures required by generally accepted accounting principles. Winters may compile such financial statements, provided the

Accepted Answer

A)  Reason for omitting the disclosures is explained in the engagement letter and acknowledged in the management representation letter. 
B)  Financial statements are prepared on a comprehensive basis of accounting other than generally accepted accounting principles. 
C)  Distribution of the financial statements is restricted to internal use only. 
D)  Omission is not undertaken to mislead the users of the financial statements and is properly disclosed in the accountant's report.

Question 8

Examples of attest engagements include examination, review, and agreed-upon procedures engagements.

Accepted Answer

A) True 
 B)False

Question 9

This concept, while used by both internal and external auditors, is typically assessed quite differently for each.

Accepted Answer

A)  Competence. 
B)  Objectivity. 
C)  Integrity. 
D)  Materiality.

Question 10

Direct services offered under PrimePlus include all of the following except:

Accepted Answer

A)  Accounting for the entity's income. 
B)  Providing assurances about the quality of care. 
C)  Supervising the entity's investments. 
D)  Arranging for payment of care.

Question 11

When an accountant is not independent of an entity and is requested to perform a compilation of the entity's financial statements, the accountant

Accepted Answer

A)  Is precluded from accepting the engagement. 
B)  May accept the engagement and need not disclose the lack of independence. 
C)  May accept the engagement and should disclose the lack of independence, but need not indicate the reason for the lack of independence. 
D)  May accept the engagement and should disclose both the lack of independence and the reason for the lack of independence.

Question 12

In an examination of prospective financial statements, which of the following would not require a departure from the standard examination report?

Accepted Answer

A)  Scope limitation. 
B)  Unreasonable assumptions. 
C)  Departure from AICPA presentation guidelines. 
D)  All of the other items listed would require a departure from the standard examination report.

Question 13

The report in a review engagement provides

Accepted Answer

A)  Limited assurance. 
B)  Positive assurance. 
C)  An opinion. 
D)  A summary of findings.

Question 14

For an auditor to examine management's assertions about the effectiveness of internal control in an attestation engagement, three conditions are necessary. Briefly explain them.

Accepted Answer

The answer of For an auditor to examine management's assertions...

Question 15

As with most professionals, internal auditors must follow guidelines promoting ethical conduct. The IIA Code of Ethics is important for internal auditors because the reliability of their work depends on a reputation for a high level of personal integrity. The Code of Ethics consists of four main principles of ethical conduct and some associated rules that underpin the expected conduct of IIA members. List the four main principles of the Code of Ethics and explain each.

Accepted Answer

The answer of As with most professionals, internal auditors must...

Question 16

Prospective financial statements may be prepared for

Accepted Answer

A)  Only general use. 
B)  Only limited use. 
C)  Only internal use. 
D)  General, limited and internal use.

Question 17

Which of the following procedures is usually included in a review engagement of a nonpublic entity?

Accepted Answer

A)  The confirmation of accounts receivable. 
B)  A study and evaluation of internal control. 
C)  An inquiry concerning subsequent events. 
D)  The observation of physical inventory counts.

Question 18

The International Professional Practices Framework developed by the IIA includes all of the following types of guidance, except:

Accepted Answer

A)  Standards. 
B)  Interpretations of Standards. 
C)  Practice advisories. 
D)  Practice guides.

Question 19

How has the advancement in technology led to the creation of the Trust Services?

Accepted Answer

The answer of How has the advancement in technology led...

Exam 21: Assurance, Attestation, and Internal Auditing Services

Which of the following would an accountant not need to know when conducting a compilation?

In providing PrimePlus services, a CPA is likely to perform all of the following functions except:

An attest service occurs when a practitioner is engaged to issue a report on subject matter that is the responsibility of another party.

When an accountant compiles a nonpublic entity's financial statements that omit substantially all disclosures required by generally accepted accounting principles, the accountant should indicate in the compilation report that the financial statements are

Management and the external auditor are responsible for the effectiveness of the entity's internal control.

Accepting an engagement to compile a financial projection for a public company most likely would be inappropriate if the projection were to be distributed to

Jones Retailing, a nonpublic entity, has asked Winters, CPA, to compile financial statements that omit substantially all disclosures required by generally accepted accounting principles. Winters may compile such financial statements, provided the

Examples of attest engagements include examination, review, and agreed-upon procedures engagements.

This concept, while used by both internal and external auditors, is typically assessed quite differently for each.

Direct services offered under PrimePlus include all of the following except:

When an accountant is not independent of an entity and is requested to perform a compilation of the entity's financial statements, the accountant

In an examination of prospective financial statements, which of the following would not require a departure from the standard examination report?

The report in a review engagement provides

For an auditor to examine management's assertions about the effectiveness of internal control in an attestation engagement, three conditions are necessary. Briefly explain them.

Prospective financial statements may be prepared for

Which of the following procedures is usually included in a review engagement of a nonpublic entity?

The International Professional Practices Framework developed by the IIA includes all of the following types of guidance, except:

How has the advancement in technology led to the creation of the Trust Services?